Foreign business and the Chinese Communist Party - additional stress to US-China commercial relations

It is widely agreed by foreign multinational corporations operating in China that the Chinese Communist Party (CCP) is strengthening its influence — often gaining direct decision-making power — over the international firms doing business in China.

CCP officials are increasingly calling on companies to support the creation of party organizations among their employees. The potential for party groups to influence corporate decision making has raised concern among many US company executives - such an environment is only adding more stress to the US-China commercial relationship.

Since taking power, Xi has reasserted the CCP's supremacy, with himself as its “core” leader. This has meant greater control over personnel and strategy at state-owned enterprises, which control about 40 percent of the China’s industrial production, as well as schools and universities. Xi’s chief policy-making instrument has been an increasing array of party “leading small groups,” which set and coordinate policy.

Foreign companies are concerned about the establishment of a party unit in a foreign company and what this means should the CCP play a broader role in foreign companies’ operational decision making. For example, making decisions which are political rather than for business reasons.

No doubt American business is telling the Trump administration such moves by the CCP into potential management roles of foreign-invested enterprises is not a positive step for the commercial relationship.

Should the current trade irritation between China and the United States worsen, Beijing could be moved to intensify the party’s role in foreign business further, even allowing the boycotting of American goods and services, creating yet more headaches for businesses operating in China.

This real time business environment has put American companies in particular in the middle of a brewing fight between Beijing and Washington.

Enjoy the ride.

GEOECONOMICS

China ‘welcomes’ Mnuchin’s interest in traveling to Beijing for trade talks: WSJ reports, Treasury Secretary Steven Mnuchin says he may be heading to Beijing for trade negotiations, suggesting an easing of US-China tensions that have widened to include big-name companies in both countries. Mr. Mnuchin said Saturday he is considering the China trip, and on Sunday, China’s Commerce Ministry said in a terse statement that “the Chinese side welcomes this.” The display of good will, following weeks of harsh words from both sides, gives rise to hope of a thaw in a trade stalemate that has seen both countries slap tariffs on some goods and threaten to impose them on a lengthening list of products.

In US-North Korea talks, China is left out and worried: NYT reports, Beijing is concerned that a grand deal with North Korea’s longtime enemies could diminish its influence over Pyongyang, experts said.

"For more than a decade, Chinese political and corporate leaders have been scouring the globe with seemingly bottomless wallets in hand. From Asia to Africa, the U.S. and Latin America, the results are hard to ignore as China has asserted itself as an emerging world power. Less well known is China’s diffuse but expanding footprint in Europe."

Ahead of summit, South Korea says it will stop blasting K-Pop, propaganda along border with the North: LAT reports, the South Korean military has announced it will muffle high-decibel propaganda loudspeakers along the highly fortified border as a gesture of goodwill ahead of this week's summit between the two nations' leaders.

Macron has little to show for his efforts to court Trump: NYT reports, President Emmanuel Macron of France leaves on Monday for a state visit to Washington, where he will try, once again, to close the gap with President Trump on climate change, Iran and trade.

Macron will visit DC today with a tour of Mt. Vernon followed by a dinner on the property - more meetings, press conference, and proper State Dinner tomorrow.

LAT: French, German leaders will bring Trump the same message: Save the Iran nuclear deal

GOP split as banks take on gun industry: Politico reports, it's a conundrum that puts free-market principles at odds with gun rights, and Republicans across the board are genuinely split.

ENTERPRISE

Tencent music plans IPO; Valuation could exceed $25 billion: WSJ reports, Tencent Music, China’s largest music-streaming company, is preparing what would be one of the largest tech IPOs ever.

WSJ: US-China trade war is bad news for Google’s expansion

"Google is relying on several Chinese companies to distribute its Android apps to millions of less-affluent smartphone users, even as rising trade tensions between China and the U.S. are making those partnerships more risky."

China's ZTE and Huawei to take big hits from US restrictions: Nikkei reports, cut-off access to 5G tech and tainted images will hurt device makers.

Guidance for employees on nonpaying customers: WSJ reports, recent arrests of two nonpaying visitors at a Philadelphia Starbucks have raised questions among some employees about how to handle such situations.

FT: General Electric: Zombieland

"Conglomerate can only get by on dullness for so long"

#Ouch

Tata Consultancy Services is set to be India’s first $100bn in a nearly a decade.

Reuters: Amazon to double down on groceries; foray deeper into fresh produce in India